Financing local SMEs
The ongoing COVID-19 pandemic has brought considerable disruption to emerging markets and developing countries on every continent. The Dutch Good Growth Fund is using this time to work closely with our current investee funds and financial institutions, to provide assistance where possible to help them navigate this difficult economic period, and to assess the longer term impacts for the whole portfolio.
Throughout this period the applications process to DGGF remains open. We ask all applicants to please keep in mind that the current economic uncertainty may cause some delays to decision making with regards to their proposals, but all proposals will continue to be thoroughly assessed by our investment team.
Through investment and client support, the Dutch Good Growth Fund remains committed to the long-term goal of boosting the finance ecosystems for missing middle SMEs in our target countries.
Would you like to ask us a question? Don't hesitate to contact us via the telephone number: +31 (0)88 792 94 57) or email adress: firstname.lastname@example.org.
The DGGF 'Financing Local SMEs' is an initiative from the Dutch Ministry of Foreign Affairs. It aims to improve access to finance for 'missing middle' SMEs in selected DGGF countries. The 'missing middle' refers to entrepreneurs whose financing needs are not served by microfinance or conventional capital market players. Greater access to finance enables local SMEs to grow and thus contributes to sustainable development in frontier markets. DGGF particularly aims to invest in young or female entrepreneurs and entrepreneurs in fragile states.
The DGGF ‘Financing Local SMEs’ aims to reach the missing middle via two different ways:
- Intermediary investment funds for local SMEs
- Seed Capital & Business Development
Would you like to know more about DGGF’s impact to date? Read the impact report 'Enabling entrepreneurship in frontier markets' (pdf).
1. Intermediary investment funds for local SMEs
To increase local SMEs’ access to finance and improve the local financial ecosystem, DGGF ‘Financing Local SMEs’ invests in funds which then invest in businesses in DGGF countries. DGGF increases its impact by investing in intermediary funds that have the relevant knowledge and networks to reach local SMEs.
Do you think your investment fund for local SMEs meets the conditions for DGGF support? Then please fill in the online Quickscan - Intermediate financing of local SMEs.
Funds of funds model
DGGF uses a ‘fund of funds’ model. This is made up of two distinct levels in the investment chain.
- DGGF invests in mainly locally operating, existing or new funds and financial intermediaries.
- These financial intermediaries then offer a range of customised financing products to SMEs. DGGF does not invest directly in SMEs.
- Factsheet – Investment funds local SMEs (pdf)
- Conditions for qualification Investment funds local SMEs (pdf)
- ESG Policy – Financing local SMEs (pdf)
- The latest Impact Newsletter (pdf)
Take a look at previous Impact Newsletters.
2. Seed Capital & Business Development
The Seed Capital and Business Development (SC&BD) programme aims to further the impact of the investment services in 4 ways:
Supporting early-stage SME finance initiatives that are of strategic interest to DGGF, but too young, small or risky for an investment to form part of the DGGF investment portfolio right now.
Developing and sharing practice-based knowledge by working with and learning from investees, co-investors and other field builders.
Developing entrepreneurial ecosystems by supporting local initiatives that provide quality and affordable capacity-building services to young and first-time entrepreneurs in a sustainable way.
DGGF investment clients can apply for technical assistance (TA) to strengthen their own capacity and operations or for business development services (BDS) to provide support to their investee SMEs and the broader ecosystem. Investment clients can get help with making sure their TAX/ESG/Result measurement practices meet DGGF standards.
- Factsheet ‘Early-stage SME Finance Initiatives’ (pdf)
- Factsheet ‘Incubation ecosystem support programme’ (pdf)
- Factsheet ‘Supporting DGGF clients’ (pdf)
- Audit protocol-SC&BD Programme (pdf)
Enabling entrepreneurship in frontier markets
DGGF ‘Financing Local SMEs’ applies a unique ecosystem approach. This combines investments with capacity building and ecosystem support initiatives to help local entrepreneurs. In the last five years, DGGF ‘Financing local SMEs’ has been able to create a positive impact in 60 countries by, among other things, supporting 47,000 jobs and financing more than 6,500 SMEs via its support to local finance providers.
Do you want to know more about how DGGF’s unique approach is making an impact? Read our 'Enabling entrepreneurship in frontier markets' (pdf) report.
You can find more inspiring case stories about entrepreneurs that were able to succeed with the help of DGGF’s investment on the ‘DGGF in practice’ page.